4.4.3 Punitive damages
According to Article 1185 of the Civil Code and Article 71 of the Patent Law, in a case of intentional infringement of patent rights, and where the circumstances are serious, the people’s courts may apply one to five times the punitive damages. In March 2021, the Interpretation of Punitive Damages in Intellectual Property Civil Cases was implemented. This judicial interpretation specifies the application scope of punitive damages, the contents and time of the request, the determination of intentional infringement and serious circumstances, the calculation basis and multiples, and so on. In civil cases involving patent infringement, the determination of punitive damages primarily involves the issues in the following sections.
4.4.3.1 Time limit for requesting punitive damages
Where a plaintiff requests punitive damages, they must clearly state the amount of the damages, the calculation method, and the facts and grounds serving as the basis thereof when filing the lawsuit. Where a plaintiff adds a request for punitive damages before the end of oral arguments in the court of first instance, the people’s courts shall permit such an addition. Where a plaintiff adds a request for punitive damages during the trial of second instance, the people’s courts may conduct mediation in the principle of voluntariness of the parties and, if the mediation fails, notify the concerned party to file a separate lawsuit.
4.4.3.2 Determination of intentional patent infringement
The people’s courts need to consider the specific category of a patent right being infringed, the status of the right, the popularity of the relevant product, the relation between the defendant and the plaintiff or an interested party, and so on. According to Article 3 of the Interpretation of Punitive Damages in Intellectual Property Civil Cases, under the following circumstances, the people’s courts may preliminarily determine that the defendant has intentionally infringed the intellectual property right:
- (1) the defendant continues the infringing act after being notified or warned by the plaintiff or an interested party;
- (2) the defendant or the legal representative or administrator thereof is the legal representative, administrator, or actual controller of the plaintiff or an interested party;
- (3) the defendant has a labor relation, service relation, cooperation relation, licensing relation, distribution relation, agency relation, representation relation, etc. with the plaintiff or an interested party, and had access to the infringed intellectual property;
- (4) the defendant and the plaintiff or an interested party have business dealings or have previously negotiated with each other to conclude a contract, and had access to the infringed intellectual property.
4.4.3.3 Identification of serious circumstances of patent infringement
The people’s courts shall comprehensively consider the means and times of infringement; the duration, geological coverage, scale and consequences of the acts of infringement; and the acts of the infringer during litigation. According to Article 4 of the Interpretation of Punitive Damages in Intellectual Property Civil Cases, the defendant can be identified as having serious circumstances in case of the following:
- (1) conducting the same or similar acts of infringement after being subject to administrative punishment or being ordered by a court to assume liability for infringement;
- (2) taking the infringement as occupation (business);
- (3) falsifying, destroying, or concealing evidence of infringement;
- (4) refusing to enforce preservation rulings;
- (5) acquiring huge profits or causing huge losses to the right holder due to the infringement;
- (6) national security, public interest, or personal health are possibly damaged because of the acts of infringement.
4.4.3.4 Basis for the calculation of punitive damages
The people’s courts shall take the amount of losses actually suffered by the plaintiff, or the amount of illegal gains or profits earned by the infringer as a result of the infringement, as the basis for calculating punitive damages. This calculation basis does not include the reasonable expenses of the right holder paid in putting an end to the infringement. Where it is difficult to calculate the amount of actual losses, amount of illegal gains or amount of profits, these amounts shall be reasonably determined with reference to a multiple of the royalties for the license, which will then be taken as the calculation basis for punitive damages.
4.4.3.5 Determination of the multiple of punitive damages
To determine the multiple of punitive damages, the people’s courts comprehensively consider the degree of subjective fault of the defendant, the severity of circumstances of infringement and so on. Where the defendant has been subject to administrative punishment or criminal penalty due to the same act of infringement, and this has been fully enforced, the defendant’s assertion of reducing or exempting the liability for punitive damages will not be supported by the people’s courts but may be considered in determining the multiple.